[Med-privacy] Re: [cipih] 2nd Discussion: advance purchase contracts

[Jeff Williams]

Adian and all,

  The biggest problem I see with what your proposal requires is that the
patient has to give up his/her medical and personal privacy in order to
be treated with these lower cost developed vaccines.  That is far to
high a price as well as far to big of a risk to receive said treatment at
a reduced price and one of the biggest risks is that of identity theft
of misuse of those medical records...

CIPIH wrote:

> Commission on Intellectual Property Rights, Innovation and Public Health Open Discussion Forum
> *********************
> This posting was submitted by: "Aidan Hollis" <ahollis@ucalgary.ca>
> Advance purchase contracts provide an excellent method to enhance our
> existing patent system. They allow for innovators to anticipate obtaining a
> substantial return on an investment into a vaccine. As I understand the
> proposed mechanism, a vaccine authority would stipulate vaccine
> characteristics, including effectiveness, side effects, morbidity, ease of
> vaccination, pricing, and a copayment to be made by the vaccine authority,
> in advance. Innovators who developed such a vaccine would be free to take up
> the offer if they wished to do so. The anticipated price would presumably be
> approximately average production cost, with the copayment by the authority
> adequate to provide a suitable risk-adjusted return to the innovator.
> Assuming 200m doses provided, the idea is that the copayment would be around
> $15 per drug, or about $3bn. The innovator would be required to continue to
> price the vaccine at approximately cost for doses above 200m.
>
> The key benefit of this proposal is that it would likely draw extra
> resources into developing vaccines which met the pre-specified technical
> requirements. If no suitable vaccine was developed, then no money need
> actually be paid, so that it is a case of pay for performance, an important
> characteristic of any scheme trying to elicit effort when the costs and
> abilities of firms are unknown.
>
> The key problem to such a scheme is that it requires the authority to know
> in advance the characteristics of the vaccine, including effectiveness, side
> effects, duration, costs, etc. But are these things knowable? It might be
> more attractive, in such a circumstance, to promise different co-payments,
> depending on the characteristic of the vaccine developed. Those which are
> better should receive more, and those which are less effective should
> receive a smaller reward. In addition, it is possible that other treatments
> for the relevant diseases might appear -- for example, a course of drugs
> which eliminated the parasite effectively. Such drugs would fail to meet the
> terms of the purchase commitment, of course, and would not be eligible,
> although it might be desirable to stimulate development of those drugs too.
> So it would be helpful if the purchase commitment could include other
> medical innovations which addressed the relevant health needs.
>
> There is an alternative model which could address exactly these concerns: a
> model in which any patented medical innovation which was useful for treating
> the diseases of concern -- tuberculosis, malaria, schistosomiasis, and
> perhaps HIV/AIDS -- would be eligible to receive rewards for treatment of
> those diseases in developing countries, based on the incremental therapeutic
> effect of the innovation on health status in those countries. To ensure
> low-cost pricing, and to claim the rewards, the developers would have to
> give up patent protection in those countries. The reward to the innovators
> would come entirely from rewards paid by the authority to the innovators.
> Instead of specifying technical characteristics, price, etc in advance, the
> rewards would specify the desired health impacts (eg, an increase in QALYs).
> A vaccine or medicine which had small sales, or had only small impact on
> health status, would receive small rewards; a vaccine or medicine which had
> large sales and a significant impact on health outcomes would receive large
> rewards. A more complete description of the sort of scheme proposed is
> provided at
> http://econ.ucalgary.ca/fac-files/ah/drugprizes.pdf (revised Nov 12 2004)
>
> One criticism of the scheme I am proposing is that it is difficult to
> determine what the health impact of a given vaccine or medicine is at the
> time it is given. Admitted. But then how hard is it to know the health
> impact of a vaccine before it is even developed? This latter problem is the
> problem facing the advance purchase commitment scheme.
>
> The proposal described in my paper (above) suggests a complete reform of the
> system of rewarding drug innovation. A much more modest implementation of it
> would, I think, be comparable to the advance purchase commitment. A reward
> program could be set up which would offer rewards for medical innovations
> relating to a specific disease, such as malaria. Any new patented treatment
> of malaria would be eligible to attract rewards, with total payments set at
> say $200m per year, for a period of say 20 years. Firms would have a choice
> between keeping their patents witih no reward, or allowing zero-royalty
> licensing in the relevant countries and obtaining a reward. The $200m would
> be divided between treatments based on their incremental therapeutic effects
> in the selected countries. It would be necessary to make estimates of these
> incremental therapeutic effects, based on the effectiveness of the medicine
> and the total amount of the medicine or vaccine sold.
>
> I want to address a few of the questions posed by CIPIH below.
>
> One of the problems with advance purchase commitments is the uncertainty of
> meeting the authority's technical and pricing requirements. My proposal does
> away with that concern, since the only relevant criteria are whether the
> drug or vaccines are sold widely and are therapeutically effective.
>
> The authority dispensing such rewards (or deciding on whether a vaccine
> qualifies) would likely face considerable political pressure. However,
> pricing authorities such as Australia's PBS have successfully faced down
> political pressure, so this appears to be possible.
>
> I hope that these comments will be helpful in thinking about the advance
> purchase commitments proposals, which I believe would in any case be a
> significant step forward. I would welcome any response.
>
> Aidan Hollis
>
> Associate Professor
> Department of Economics
> University of Calgary
>
> 2500 University Dr NW
> Calgary Alberta
> T2N 1N4 Canada
>
> tel: 403 220 5861  fax: 403 282 5262
> email: ahollis@ucalgary.ca
> web: http://econ.ucalgary.ca/hollis.htm
> ----- Original Message -----
> From: "CIPIH" <cipih-participant@who.int>
> To: "Commission on Intellectual Property Rights, Innovation and Public
> Health" <cipih@astro.lyris.net>
> Sent: Thursday, November 11, 2004 5:11 AM
> Subject: [cipih] 2nd Discussion: Are advance purchase contracts the answer?
>
> > Commission on Intellectual Property Rights, Innovation and Public Health
> > Open Discussion Forum
> > *********************
> > This posting was submitted by: "Muge Olcay" <olcaym@who.int>
> > Are advance purchase contracts the answer?
> >
> > A proposal for accelerating vaccine research has been made by a Working
> > Group sponsored by the Centre for Global Development. It is available on
> > our website at the following link:
> > www.who.int/intellectualproperty/submissions/en.
> >
> > The basic idea of this is simple. Governments, international organisations
> > and other possible funders such as foundations would enter into a contract
> > which would promise the developer of a vaccine (with defined
> > characteristics) a guaranteed market at a price which would reward
> > investment in the R&D necessary to develop such a vaccine. A specified
> > number of doses would be purchased at this (higher) price. Thereafter the
> > contract would specify distribution at a cost-plus price.
> >
> > As a concrete example, it is proposed that sponsors (funders) would make a
> > legally binding promise to pay 90% of the cost of up to 200 million
> > treatments for a malaria vaccine at $15 a dose (i.e. $3billion in total).
> > This is intended to mimic the working of the market for a sub-blockbuster
> > drug. In order to qualify, the vaccine would need to meet various
> > technical requirements concerning efficacy, duration of protection and
> > others.
> >
> > The idea of this scheme is to stimulate R&D on vaccines needed by
> > developing countries, but to reconcile through the tiered pricing scheme
> > the incentive for R&D with the objective of affordable access in
> > developing countries.
> >
> > But there are many issues in making such a scheme operational:
> >
> > - Specifying the exact characteristics of a vaccine to qualify for the
> > "prize". In the real world, there will always be uncertainties as to
> > whether or not these had been met.
> >
> > - A Committee is proposed to rule on such matters, independent of sponsors
> > or companies. Would such a committee have sufficient credibility? Would it
> > not become politicised, given the potential rewards at stake, and the
> > potentially conflicting interests of sponsors and companies?
> >
> > - Will potential funders, governments or non-profits, be prepared to make
> > cast-iron legally binding promises in the undefined future to potentially
> > large financial commitments? Even if they do, can one guarantee that their
> > successors will not try to avoid such commitments when they arise?
> >
> > - Given the uncertainties generated by the above, are companies likely in
> > practice to shift resources to work on vaccines needed by developing
> > countries?
> >
> > There are many other issues but these seem to the Secretariat of the
> > Commission to be key ones. We would welcome other views on this particular
> > scheme.
> >
> > _________________________________
> >
> > Secretariat of the Commission on
> > Intellectual Property Rights,
> > Innovation and Public Health (CIPIH)
> >
> >
> > ---
> > A posting from the Commission on Intellectually Property Rights,
> > Innovation and Public Health e-Forum
> >
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> >
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> >
> > To read discussion archives: www.who.int/intellectualproperty/forum
> >
> > To submit a posting, send to cipih@astro.lyris.net
> >
> > *********************
> >
> > The CIPIH e-Forum contains submissions from parties outside the World
> > Health Organization.
> > The views expressed in these submissions are solely the responsibility of
> > the authors
> > and do not necessarily represent the views of the World Health
> > Organization.
> >
>
> ---
> A posting from the Commission on Intellectually Property Rights, Innovation and Public Health e-Forum
>
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> To read discussion archives: www.who.int/intellectualproperty/forum
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>
> *********************
>
> The CIPIH e-Forum contains submissions from parties outside the World Health Organization.
> The views expressed in these submissions are solely the responsibility of the authors
> and do not necessarily represent the views of the World Health Organization.

Regards,

--
Jeffrey A. Williams
Spokesman for INEGroup LLA. - (Over 134k members/stakeholders strong!)
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